Next to line your book?

Don't be fooled. Gen Y knows a lot more than you may think about financial planning. So much more, that you, the advisor, may want to rethink your approach to servicing them.

Next to line your book?
Gen Y may be more on the ‘up and up’ with financial planning than we are willing to admit – and advisors may want to rethink how they approach this untapped market.

Findings from two U.S. surveys indicate that young adults between the ages of 18 to 34 are increasingly conservative in their approach to finances – with 14 per cent indicating they are pursuing growth when saving and investing; while about 30 per cent favouring taking a ‘slow-and-steady’ approach.

Gen Ys also appear to be more financially frugal than their predecessors, with 62 per cent reporting they are ‘highly disciplined’ or ‘disciplined’ financial planners, as compared to 54 per cent of adults 60 years and older. The surveys – conducted by Northwestern Mutual and Principal Financial Group – also found that 68 per cent of respondents believe there is room to improve how they manage money.

Financial advisor, Sophia Bera, who focuses specifically on servicing Gen Y clients, recommends advisors get with the program and realize that they may have to change their business model – such as communicating predominantly via email and text, becoming mobile friendly and providing online financial advice.
“A few of my clients have come to me after seeing their parents advisors because they didn’t feel that connection, they didn’t’ feel like they (the advisors) understood what their priorities are, what their goals and values are and what was important to them,” says Bera, who runs her entire business online, rarely meeting with clients face-to-face.
“Clients like that I am relatable. They (advisors) are going to lose clients to people like me and other younger advisors if they are not accessible, if they are not relatable and if they don’t understand the world in which their clients are living.”

Furthermore, this group may not have a lot to invest today, but they likely will in the next decade or so. Myron Neufeld, president of liability insurance provider ERAssure, says advisors should be thinking two steps ahead when dealing with clients, building relationships with their offspring and working towards servicing them down the line.

“I find it interesting when an advisor wonders why they didn’t get included in the transfer of wealth when they spent no time building a relationship with the children,” he says. “Well why didn’t they spend time building a relationship? …Because the 30 year olds don’t have any money. They are not of interest to a financial advisor. But they need to be of interest to them.”

More survey results:
  • 94 percent believe saving for retirement is imperative
  • 65 percent began saving for retirement at age 25
  • 80 percent had established a monthly budget
  • 66 percent report having an emergency savings fund
  • More than 35 per cent have worked with a financial advisor
  • One in four, who have not worked with an advisor, said they are waiting for their retirement income to reach a certain balance or for a “life event” including a wedding or birth to occur
  • $100,000 is the average retirement account balance that a Gen Y member would want saved before meeting with an advisor
  • Average member of Gen Y would meet with an advisor after reaching 39 years of age
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